Rocket Lab's Neutron Program Hits a Snag: Wall Street Trims Targets but Won't Budge on Ratings

Rocket Lab investors endured a bruising end to the trading week, with the stock shedding 8.2% on Friday to close at 45.25 euros. The trigger: a manufacturing setback that pushes the maiden flight of the company's Neutron rocket — originally slated for the fourth quarter of 2026 — into 2027.

The sell-off raises the usual question of whether this is a justified repricing or an overreaction to a delay that is, by space-industry standards, hardly exotic. The verdict from major research houses leans toward the latter.

Two Analysts, One Message: Buy the Dip

KeyBanc moved first, on Thursday, cutting its price target to $100 from $135 while keeping the stock at "Overweight." The firm cited the revised timeline alongside valuation pressure on high-growth space names. Citizens followed on Friday, slashing its target to $90 from $130 but reaffirming its "Outperform" rating — or "Market Outperform," depending on which desk you ask.

The pattern is telling. Both houses have reworked their models to account for later monetization of Neutron launches, yet neither has wavered on its positive stance. Their fair-value estimates remain well above current levels, a signal that the fundamental case — and management's ability to execute — is not in doubt.

What Went Wrong Inside the Tank

The trouble traces back to a change in the manufacturing process that introduced air pockets, or voids, into the forward tank domes of the first stage. According to media reports, the defects surfaced following that process adjustment. Rocket Lab disclosed the issue on Wednesday, saying it had identified the root cause and is implementing fixes in production.

The company also confirmed the flaw in the carbon-fiber dome of the first-stage fuel tank, which was caught during routine inspections. Management has been quick to stress that the problem is understood and being addressed. Even so, a disclosure of this kind is typically enough to spark heavy selling.

Skeptics might argue that a rocket program slipping a full year is a red flag. The more grounded read: catching structural defects on the ground is precisely what rigorous quality control looks like. A rushed test flight that ended in an explosion would have set the program back by years and done far deeper damage to both the balance sheet and investor trust.

A Well-Timed Share Sale — or Not

Adding to the noise, a regulatory filing earlier this month showed CFO Adam Spice offloading 140,157 shares on October 1 for proceeds of $9,925,448. The transaction, however, was executed under a pre-arranged Rule 10b5-1 trading plan, which makes it a poor gauge of insider confidence.

The Base Business Keeps Humming

While Neutron's schedule is being reworked, Rocket Lab's existing operations are proceeding as planned. The company is preparing the next launch of its workhorse Electron rocket for customer HawkEye 360 — a reminder that the commercial engine is still running even as the flagship program cools its heels.

The stock now sits 66% below its 52-week high, still searching for a durable floor. For anyone holding a growth-oriented space name, that kind of drawdown is part of the bargain. The recent wave of selling mostly reflects short-term players balking at a longer wait for Neutron's first commercial payoff.

What matters more is the substance underneath. Rocket Lab remains one of the few commercial space operators with a functioning legacy business, and two major research houses standing by their buy calls despite slashed targets suggests the foundation is intact. The setback slows the pace; it doesn't erase the technological promise. Patient investors may see this as a routine stress test on a demanding path rather than a turning point.